China's Zhou, A Western-Style Voice Heard In Washington
(there is life after capitalism - some here don't think so - but maybe some do - the chinese maybe will understand soon that market forces are one different way of running society)
By Lingling Wei and Denis McMahon
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--As China faces rising trade tensions with the U.S., Beijing has found itself a negotiator with whom many in Washington like to deal: the country's central bank chief, Zhou Xiaochuan.
Often, Zhou appears just like a common Joe to his negotiation counterparts, former or present. "He's quite an unusual Chinese, rather western style," says former U.S. trade representative for China Joseph Massey, who in the late 1980s held trade talks with Zhou, then assistant minister of foreign trade. Those talks eventually led to the landmark 1992 U.S.-China agreement on intellectual-property protection. (BWAHAHA)
"He understood that personal smiles go a long way to lubricating tough negotiations," says Massey, who now teaches at Dartmouth College, of the Chinese economist-turned-politician.
Almost two decades later, one of Zhou's main counterparts in Washington - U.S. Treasury Secretary John Snow - is often seen at ease with the People's Bank of China governor. Snow, in a written comment for this article, says of Zhou: "He is respected in China and internationally both for his technical expertise and for his depth of knowledge in economics."
Last week, Zhou, who tends to keep a low public profile in China, attracted the world's attention when he publicly defended China on its foreign-exchange policy and challenged its U.S. critics before the finance ministers and central bankers for the Group of Seven rich nations. He repeated Beijing's stance that "a gradualist approach" to floating the country's currency is in the world's best interests and that the yuan's exchange rate against the dollar isn't to blame for America's huge trade deficit with China, which stood at $202 billion last year.
Moreover, he openly suggested issues that U.S. politicians should try to sort out while they busily press China to address global economic imbalances. In a statement to the International Monetary Fund, which, following the G-7 gathering, held its annual spring meetings with World Bank, Zhou cited "weakened risk assessment" of investors chasing high returns as a potential risk to the global financial markets. As a result, in addition to policy coordination among the major economies, he stated, in a clear hint at the U.S., "strengthened surveillance over hedge funds will also help prevent disruptive adjustments in financial markets and asset prices."
When asked specifically what he would suggest his U.S. counterparts do, Zhou told a group of reporters on Saturday that "Chinese people, including Chinese officials, are usually prudent. We don't want to comment too much on the U.S. policy." Nonetheless, he immediately added that "a lot of proposals from economists" concur that America should do more to boost domestic savings and reduce budget deficits, just as China should do more to encourage its citizens to save less and spend more.
The Chinese government now appears to be working harder to make its case to Congress, something U.S. Treasury officials have privately urged them to do for a long time. In a hearing on U.S.-China trade earlier this month, Sen. Jim Bunning, R-Ky., complained that senior Chinese officials refused to meet with a delegation of congressmen from House and Senate trade subcommittees last year.
In contrast, Senators Charles Schumer, D-N.Y. and Lindsey Graham, R-S.C., met with senior Chinese officials including Zhou, and Vice Premier Wu Yi during their visit in March. Upon returning to Washington, the senators agreed to postpone a vote on their legislation to impose a 27.5% tariff on U.S. imports from China in retaliation for an allegedly undervalued currency. China revalued its currency 2.1% against the dollar on July 21, but the yuan has appreciated only 1.2% further since. Schumer and Graham said their meetings had convinced them that China truly sees a move to a flexible currency to be in its own interests.
A Reformist and Market Thinker
Born in 1948 in China's northeastern Heilongjiang province, Zhou graduated from Beijing Chemical Engineering Institute in 1975 and, a decade later, received a PhD degree in economic systems engineering from Qinghua University in Beijing. He was assistant minister of Foreign Trade and Economics Cooperation from 1986 to 1989. Among other notable posts: he served between 1998 and 2000 as president of China Construction Bank, one of the Big Four state-owned banks, and as head of the China Securities Regulatory Commission for the following two years.
During his tenure as the country's top securities regulator, he earned a reputation for carrying out difficult changes through cracking down on market speculation and installing better governance among publicly-traded companies. As a result, Zhou's appointment as chief of China's central bank in December 2002 was seen as an indication that the Chinese government was serious about overhauling state banks as the country, under its commitment to the World Trade Organization, prepares to open the banking sector to full competition by the end of this year.
However, those reforms - as well as his fast rise through the ranks - also worked to instill a sense of doubt into Zhou back home upon his taking over as the central bank chief.
"He got the lowest vote among the 29 ministers" who were up for confirmation at the 10th National People's Congress in the spring of 2003, notes Cheng Li, professor of government at Hamilton College and author of "China's Leaders: The New Generation" (2001). Li says that Zhou's father, Zhou Jiannan, is believed to be one of the mentors of Jiang Zemin, former Chinese president.
"Now things have changed," Li says, pointing to Zhou's efforts to institute order and discipline in China's banking industry and other initiatives that have won him accolades from both home and abroad. Zhou has proved one of the most academically accomplished current Chinese leaders, having published more than 10 books and 100 academic articles in Chinese and international journals. At 58, he could be "a contender" next fall for a seat at the powerful Politburo of the Communist Party, Li adds.
Zhou's further elevation in China's political scene could bode well for those who hope to avoid a trade war. Recalling the debates he had with Zhou in the late 1980s, former trade representative Massey says that round of talks was "the first really intense trade negotiation between China and the U.S." as the U.S. Congress just passed legislation demanding the administration to identify countries that didn't provide adequate and effective protection for U.S. intellectual property rights.
"There could have been an unfriendly atmosphere," Massey says, but Zhou helped avoid it because "he understood why the U.S. was seeking a rule of law" in China to govern things like copyright, patents and computer software. "He understands the use of market tools to govern market economy," Massey says.
-By Lingling Wei, Dow Jones Newswires; 201-938-2089; Lingling.Wei@dowjones.com
-By Denis McMahon, Dow Jones Newswires; 8621-6120-1200; Denis.McMahon@dowjones.com
(Elizabeth Price contributed to this report.)
(END) Dow Jones Newswires
April 25, 2006 13:32 ET (17:32 GMT)
Copyright (c) 2006 Dow Jones & Company, Inc.- - 01 32 PM EDT 04-25-06 |
